PROPOSAL FOR COMPANY DEVELOPMENT Prepared to Board of Management McDonald’s Corporation Prepared by Rose Phan, Business Development Manager McDonald’s Corporation August 16, 2021 EXECUTIVE SUMMARY (My Thanh) This proposal outlines an SWOT analysis and comparison of our company - McDonald’s and the competitor - Burger King Moreover, we present some solutions for the improvement of our company to achieve good business results in the period of the next years Through the analysis, we have drawn the conclusion that McDonal’s should enhance its product quality (packaging, menu), service quality; expand market and target customers; adjust the price; test the products’ quality periodically in franchise systems and use ingredients from local businesses CHAPTER 1: INTRODUCTION (My Thanh) In a time of competition and being seriously affected by COVID-19, the F&B industry has to deal with many challenges In order to stand firm in the face of difficulties and improve McDonald’s within years, we have collected data and conducted a comparison of our company to Burger King In the analysis, we concentrate on comparing the brand recognition, the diversity of products, the services, price, number of restaurants, revenue and profit After the comparison stage, we can obviously see our strengths, opportunities or weaknesses and threats through SWOT analysis Besides, we have some solutions and recommendations to enhance McDonald’s services and quality in the next years The proposal includes three parts: ● Literature review ● Methodology ● Conclusion and recommendation CHAPTER 2: LITERATURE REVIEW (Hoang Duc) - DEFINITION OF TERMINOLOGY Brand recognition: this term explains how people are able to recognize a brand through visual or auditory information like logos, slogans, packaging, or colors Brand value: is how much your brand would worth if you sell it This term is considered when your company were to merge or be bought out by another business, and they want to use your name, logo and brand - SWOT ANALYSIS SWOT: short of Strength, Weakness, Opportunity, and Threat Analysis This analytic method is used to evaluate a company’s competitive position so that the management team can develop a suitable strategic planning This method can both assess internal and external factors, as well as current and future potential Strength (internal): is what the organization can and what makes it stand out in the competition, such as a strong brand, loyal customer base and so on - What is our competitive advantage? - What resources we have? Weakness (internal): completely opposite with Strength, it includes areas that stop the company running at optimum level With completely opposite examples with Strength either - What can we improve? - What products are underperforming Opportunity (external): external factors that are favorable for the company For example, the government reduces import fees for clothes, your import company can use this chance to reduce COGS and ultimately increase revenue - What technology can we use to improve operations? - What new market segments can we explore? Threats (external): external factors that harm to the organization Opposite to Opportunity - What new regulations threaten our operations? - Are our competitors doing well? CHAPTER 3: METHODOLOGY ( Duc & Thanh ) ❖ McDonald’s Established in 1948 in San Bernardino, California, US, by the brothers Maurice (“Mac”) and Richard McDonald The store was first famous for its smart and efficient format that could produce huge quantities of food at low prices (a basic hamburger at McDonald’s cost half the price compared to other restaurants) This giant’s headquarter is now in Chicago, Illinois, US, and it has become one of the world’s leading F&B service brands with more than 36,000 restaurants in more than 100 countries ❖ Burger King Founded in 1954 by James W McLamore David Edgerton, Burger King has become the second largest fast food hamburger chain in the world, following McDonald’s In fact, its predecessor was Insta-Burger King, established by Keith Kramer and Matthew Burns in 1953 Headquartered in Miami, Florida; the company now has more than 14,000 stores in nearly 100 countries Moreover, it is well-known for “flame broiler” hamburgers In 1957, the “Whopper” became the first major addition to the menu and it has become Burger King’s signature product while McDonald’s still sells only small hamburgers CHAPTER 4: FINDINGS / RESULTS ( Han & Trang ) Number of restaurants: ❖ McDonald’s - According to Statista2, in 2020, the number of McDonald’s restaurants were reported as 39,198 in 232 countries worldwide (both company-operated and franchised restaurants), most of them located in the USA (13,837 units) - Around 93% of McDonald's outlets around the world are owned and run by independent local entrepreneurs - McDonald's has boosted the number of stores in high-growth markets, which are growing at a faster rate than the rest of the world To further its expansion plans, the corporation has implemented a growth strategy known as the "Velocity Growth Plan." ❖ Burger King - As reported by Statista, Burger King operated and franchised 18,625 outlets worldwide in 20204 The great majority of these - 18,573 - were franchised Only 52 units are still - owned and operated by the corporation, since franchised stores have replaced them during the last ten years - Despite the fact that the number of company-operated Burger King restaurants has decreased, the total number of locations has gradually climbed since 2009 Revenue/Profit: ❖ McDonald’s - McDonald's made a total revenue of 19.21 billion dollars in 20203 The United States was the country that created the most income, accounting for 7.66 billion dollars Besides, international markets such as Australia, France, Canada, and the United Kingdom, among others, contributed the most to McDonald's overall revenue in 2020 However the total revenue in 2020 shows a 10.09% decline from 2019 due the outbreak of the pandemic - COVID-19 - McDonald's reported $5.888 billion in revenue for the quarter ended June 30, 2021 - McDonald's generated the majority of their revenue through franchised outlets, which brought in 10.73 billion dollars in 2020 ❖ Burger King - Burger King's revenue has increased in the last four years, following years of slow decline Burger King's sales fell in 2020 compared to the previous year due to the impact of the coronavirus (COVID-19) pandemic on the restaurant chain's operations - During the fiscal year 2020, Burger King made around 1.6 billion dollars in revenue This represents a 10% drop from the previous year's total of 1.78 billion dollars Brand recognition: ❖ McDonald’s - Brand value: an estimated brand value of approximately 129.32 billion U.S dollars2 In 2020, McDonald's had by far the biggest brand value of any fast service restaurant firm Not only that, but it was ranked 58th in a list of the world's largest corporations - McDonald's is also among the top ten most valuable American brands in 2021, with a brand worth of 154.92 billion dollars, ranking ninth on the list In 2020, the corporation spent approximately 650 million dollars on advertising globally - Logo: A logo is an important part of Mcdonald’s branding McDonald's is well-known for its outstanding logo design - Golden Arches, which is both simple and effective These arches may be instantly recognized from miles away, no matter where you live! The simple usage of golden arches, together with their tagline "I'm Lovin' It," was the highlight of the logo design The McDonald's logo is now the most known symbol in the world thanks to effective branding ❖ Burger King - In 2020, the brand value will be worth more than $6 billion U.S dollars4 Burger King's revenue has increased in the last four years, following years of slow decline - Logo: Authentic, uncomplicated, and excellent food is, without a doubt, what Burger King is all about The new minimalist logo fits in perfectly with the current brand evolution The logo's colors are rich and bold, inspired by Burger King's renowned flame grilling process and fresh ingredients6 The new packaging proudly displays the new logo, as well as bold colors and fun ingredient images Also, flame grill masters are reflected in Burger King staff’s outfits, which combine a contemporary and comfortable style with distinctive colors and graphics Product ❖ McDonald’s Product line: ❖ Burger King Product line Big Mac (McDonald's) Whopper with cheese (BK) Calories 550 Cal 660 Cal Total Fat 30g 46g Total Crab 45g 50g Total Sugar 9g 11g Protein 25g 32g Big Mac and Whopper are two significant burgers of McDonald’s and Burger King After listing out the nutrition of both items, Whopper is relatively fatter than Big Mac, which has higher calories by 110 Cal However, the weight of McDonald’s and Burger King’s burgers seem disparity – McDonald’s burger is estimated at 100g; meanwhile, the other one is 120g Service ❖ McDonald’s - - - In 2020, McDonald's only received 70 points out of 100 marks for total customer satisfaction McDonald’s is a pioneer of adapting to the change and working on customer’s desires McDonald’s branding strategy focuses on customer’s needs rather than fitting the norm By cutting the menu and focusing on customers' favorite foods, they were able to serve twice as much as previously To serve meals immediately and reduce service time, they decided to opt for the lean process The whole ingredient was kept already and quickly assembled into buns where there was an order Customers were extremely happy with the quick service More focusing on kids, offer toys and play area for kids Serving in 12 minutes ❖ Burger King - Burger King received 76 points out of 100 marks for total customer satisfaction - Less focusing on kids - Serving in 10 minutes - The spread of Covid-19 pandemic, Burger King launched the “Stay Home of the Whopper” campaign: asking people to stay home and order in instead of venturing out to buy burgers Burger King ensured that customers are replied to on all days of the week on their social media channel - Price - McDonald’s price seems a little cheaper than Burger King Generally, their price is quietly similar SWOT : ❖ McDonald’s - - Strength One of the most popular and valuable brands in the world When thinking of the best fries in the world, you instantly recall McDonald’s fries Wide range of products Various food items according to each region Good Marketing campaigns - - Weakness Negative publicity: McDonald’s food contains a high amount of fat, carbs, salt and sugar => obesity A heavy franchised business model Interruption of supply-chain model High employee turnover rate McDonald's uses unsustainable packaging in the environment, - - - Much recognition in Pacific Asia High quality service hence it is the source of pollution Opportunity Rebuilding brand recognition (brand image) Opportunity for international expansion, especially in Asian markets Launching more food items according to the geographical conditions Can begin selling products that provide customers with a health benefit Threats Competition from competitors like Burger King, etc Some cultures don’t support all kinds of ingredients that Mcdonald’s uses McDonald's generates the majority of their business in the United States, therefore COVID-19 could have a trickle-down effect on revenue during the recession - - ❖ Burger King - - nd Strength largest fast food burger The brand Strong finance Continue growing while keeping prices competitive Customers are consistently satisfied with its food and service Local menu options cater to the tastes and cultural individualities of various regions Opportunity An increasing desire for more sustainable menu items Diversify its meat-replacement offerings Home delivery rollout and increased tech usage could provide upside - - Weakness Lack of global diversity Not seen as a value offering among its competitors Advertising strategy repeatedly falls short Unhealthy food Threats Climate change, pandemic Strong competition in quickservice restaurants A decrease in the young customer Higher price CHAPTER 5: CONCLUSION & RECOMMENDATION ( Phuong Vy) After doing the SWOT analysis for both McDonald’s and it’s biggest competitor, Burger King, we come to a conclusion that McDonald’s should concentrate on utilizing its opportunity and strength and improving its weakness and threat Moreover, McDonald’s should catch Burger King’s weakness and have a plan on attacking it to expand the market Firstly, McDonald's has such a great market in Asia, however, Japan is the only country that has it’s restaurants nationwide, while China is a great potential market because of its huge population, and does not have much attention from McDonald's Therefore, McDolnald’s will have an enormous advantage if it takes the Chinese market into account and develops a restaurant chain there Moreover, the collaboration of McDonald’s and BTS in June brought McDonald a huge success, since BTS is a worldwide famous band, especially in Asia This partnership drew McDonald’s a huge attention, mostly from the youth who are one of the target customers of not only McDonald’s but also Burger King, it’s competitor Keep doing such marketing campaigns like this will help McDonald expand its market share in the Asia market and take Burger King customers as well Although McDonald’s is considered as one of the biggest figures in the fast food industry, it is not synonymous with McDonald’s has no threat or weakness According to our research, it has such a high employee turnover rate which results in poor customer service since the staff not have much experience in customer care Therefore, McDonald’s should improve its compensations for staff such as raising salaries, giving awards for staff of the month or staff of the year that motivates them to their best at work Moreover, organizing training workshops for new employees is also needed, especially the listening skill or customer care skill that upgrade the customers’ experience and satisfaction when they spend time at McDonald’s In addition, McDonald's should also surveys about customers’ experience at McDonald's in order to have a deep understanding of their needs, wants and demands Selling fast food, McDonald’s food in publicity’s point usually associated with the words such as fat, unhealthy, obesity and so on, this is also considered as a weakness of McDonald’s For that reason, a suggestion is given that McDonald’s should improve its menu and quality of food, adding vegan and healthy options into the menu Moreover, the packaging McDonald’s uses is also unsustainable, which contributes to polluting the environment Changing the packaging material will help McDonald’s enhance its image in customer’s eyes Besides changing the menu and packaging towards a better image, as a worldwide fast food chain, McDonald’s should revamp the menu by adapting the culture of each country, not only this will build a good impression for the customers but also avoid being boycotted For example, McDonald’s was sued because of using oil that contains beef fat for products in India, where cows are the holy animal Moreover, adjusting prices according to each region is suggested McDonald’s succeeds in many markets all over the world However, it does not have the same result in the market like Vietnam, where street food is popular for its tastiness and affordability Franchise is an option of McDonald’s to expand itself in many places which leads to a problem that the quality of product is not similar, worsening the image of McDonald’s To solve this problem, McDonald’s should study the franchises and test the product’s quality periodically to ensure the condition of the food, maintaining a good image for McDonald’s in the customers’ eyes Moreover, the terms for the franchises should be more closer, making them guarantee to keep up the best condition of McDonald’s Last but not least, the supply chain is a weakness of McDonald’s since it only takes the ingredients from specific sources which is time-consuming and costly, decreasing the profit that McDonald’s earns The solution for this problem is using the ingredients from local businesses that have similar quality as the current one Buying from local businesses is not only saving the cost and time but also having healthier and fresher ingredients which better the image of McDonald’s and gain more trust from the customers References Burger King Corporation | History & Facts Encyclopedia Britannica (2021) Retrieved 15 August 2021, from https://www.britannica.com/topic/Burger-KingCorporation McDonald's: number of restaurants worldwide | Statista Statista (2021) Retrieved 15 August 2021, from https://www.statista.com/statistics/219454/mcdonalds-restaurants-worldwide/ McDonald's Revenue 2006-2021 | MCD Macrotrends.net (2021) Retrieved 15 August 2021, from https://www.macrotrends.net/stocks/charts/MCD/mcdonalds/revenue Number of Burger King restaurants worldwide from 2009 to 2020 | Statista Statista (2021) Retrieved 15 August 2021, from https://www.statista.com/statistics/222981/number-of-burger-king-restaurantsworldwide Burger King revenue 2004-2018 | Statista Statista (2021) Retrieved 15 August 2021, from https://www.statista.com/statistics/266462/burger-king-revenue/ Burger King® Evolves Visual Brand Identity Marking the First Complete Rebrand in Over 20 Years Businesswire.com (2021) Retrieved 15 August 2021, from https://www.businesswire.com/news/home/20210107005111/en/Burger-King®Evolves-Visual-Brand-Identity-Marking-the-First-Complete-Rebrand-in-Over-20Years ACSI: Burger King restaurants in the U.S 2021 | Statista Statista (2021) Retrieved 15 August 2021, from https://www.statista.com/statistics/216692/burger-king customer-satisfaction-inthe-us/ ...EXECUTIVE SUMMARY (My Thanh) This proposal outlines an SWOT analysis and comparison of our company - McDonald’s and the competitor... solutions and recommendations to enhance McDonald’s services and quality in the next years The proposal includes three parts: ● Literature review ● Methodology ● Conclusion and recommendation... restaurants: ❖ McDonald’s - According to Statista2, in 2020, the number of McDonald’s restaurants were reported as 39,198 in 232 countries worldwide (both company-operated and franchised restaurants),